Debenhams may be preparing to go out of business, but Mike Ashley – who has coveted the department stores chain for some years – still thinks there’s a chance he could win it and has made a last-minute, cut-price approach to the company’s advisers, reports claimed at the weekend.
The move could potentially save it from liquidation following the withdrawal of JD Sports from the bidding last week.
It seems that the Frasers Group boss is trying to reach a deal that could value the business at over £200 million (a figure quoted by the Sunday Times) with reports that Frasers would operate the 124 Debenhams stores on licenses of 12 months.
If a deal can be reached, it could save up to 12,000 jobs that are currently at risk due to the imminent liquidation of the oldest and largest department store chain in Britain.
As mentioned, Mike Ashley — who includes House of Fraser among his retail chains — has long harboured ambitions to run its rival Debenhams too. He spent around £150 million acquiring an-almost 30% stake in Debenhams back when it was a listed business and pushed to have a more active role in its management, but was rebuffed by the board.
The company was taken over by a consortium of its lenders and following the administration filing earlier this year that led to it being put up for sale, Ashley tried again to take it over. But his reported £125 million offer was dismissed as too low.
JD Sports had looked to be a likely buyer of the chain, although its withdrawal following the Arcadia collapse (Arcadia is the biggest concession holder inside Debenhams stores) seemed to have put paid to any prospects of a anyone riding in to rescue the company.
But now it seems that Ashley and Frasers haven’t given up. However, Frasers finance chief Chris Wootton has warned that the Debenhams negotiations don’t mean reaching agreement will be easy. “We hope to be able to save as many jobs as possible,” he said. “However, we have found that Debenhams has been overly reliant on Arcadia for many years, and with the administration of Arcadia last week, as well as no end in sight to the outdated business rates regime which unduly punishes the likes of Debenhams, it may be a bridge too far.”
A big question that remains is whether the hedge funds that control Debenhams will be happy to accept an offer from Mike Ashley when they could potentially get more money back by selling-off the stock, as well as the brand, its leases and website, in a giant fire sale. The £200 million valuation suggested for the company is well below the £300 million that they were reportedly seeking for the business.
Debenhams has already launched a massive clearance sale in expectation that it will be wound up post-Christmas. That has meant that it stores have been very busy since Wednesday when non-essential shops reopened in England, while its website also buckled under heavy demand.
Copyright © 2020 FashionNetwork.com All rights reserved.